Ch 14 terms Flashcards

1
Q

define perfect competition

A

market in which many sellers of identical goods are all price takers
free entry and exit
no impact
many buyers

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2
Q

how to calculate total revenue

A

P x Q

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3
Q

how to calculate avg rev

A

total rev/Q
avg rev equals price

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4
Q

how to calculate marginal rev

A

change in total rev/change in Q

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5
Q

how to find perfect competition profit/loss on graph

A

y axis: vertical difference between ATC curve and MC curve
x axis: quantity produced

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6
Q

define exogenous variables

A

inputs (exo means out)

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7
Q

define endogenous variables

A

outputs (endo means in)

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8
Q

define shutdown

A

temporary decision to produce nothing
due to market conditions
still have to pay fixed costs

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9
Q

define sunk cost

A

cost already spent that should be excluded from decision making

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10
Q

equation for long run choice to enter

A

P> ATC

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11
Q

equation for long run choice to leave market

A

TR<TC or P< ATC

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12
Q

why do firms stay with 0 profit?

A

they have 0 economical profit
accounting wise making money

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13
Q

2 reasons long term supply might slope up

A
  1. production resources in limited q
  2. firms have different costd
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14
Q

calculating AVC

A

quantity x ag variable cost for that q

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15
Q

what is break even price

A

where ATC meets MC

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